Exhibit 15-9Groundcover, Inc. had never had a treasury stock transaction prior to 2016. It experienced the following treasury stock transactions during 2016: 4/1/2016:Reacquired 1,000 shares of its own $5 par common stock, originally sold at $12 a share, for $10 a share. This was the first time that Groundcover had reacquired its own stock.4/8/2016:Reissued 400 shares at $8 a share.5/2/2016:Reissued 500 shares at $13 a share.5/10/2016:Retired the remaining 100 shares.Assume the cost method is used.Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2016 would include adebit to Common Stock for $1,200debit to Treasury Stock for $1,000debit to Additional Paid-in Capital on Common Stock for $1,200credit to Additional Paid-in Capital from Treasury Stock for $200

Treasury stock: Shares which are bought back by the company from the open market but not retired from the company stock is called Treasury stock. The purchase/reacquisition of issued shares from the open market, decreases the number of outstanding shares.Date Accounts Debit Credit 5/10/2016 Common Stock (100 shares x $5 per share) $500 Additional Paid-in Capital on Common Stock [($12-$5)*1000 shares] $700 Treasury Stock (100 shares x $10 per share) $1000 Additional Paid-in Capital from Treasury Stock $200 (To record the retirement of 100 shares) Option d. credit to Additional Paid-in Capital from Treasury Stock for $200, is correct answer.

Answered: Groundcover, Inc. had never had a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Exhibit 15-9
Groundcover, Inc. had never had a treasury stock transaction prior to 2016. It experienced the following treasury stock transactions during 2016:

4/1/2016:	Reacquired 1,000 shares of its own $5 par common stock, originally sold at $12 a share, for $10 a share. This was the first time that Groundcover had reacquired its own stock.
4/8/2016:	Reissued 400 shares at $8 a share.
5/2/2016:	Reissued 500 shares at $13 a share.
5/10/2016:	Retired the remaining 100 shares.

Assume the cost method is used.

Refer to Exhibit 15-9. The entry to record the retirement of 100 shares on 5/10/2016 would include a

debit to Common Stock for $1,200

debit to Treasury Stock for $1,000

debit to Additional Paid-in Capital on Common Stock for $1,200

credit to Additional Paid-in Capital from Treasury Stock for $200

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